Self-sustaining foreign entity operates independent of the parent multinational and the current-rate method is the primary approach for translation of individual accounts.

Question

Quizplus · Accepted Answer

If a self-sustaining foreign entity operates independently of its parent multinational, then its financial statements will be translated using the current-rate method. This method translates individual accounts at the current exchange rate, which reflects the value of the foreign entity's assets and liabilities in terms of the parent company's reporting currency. This approach is used when the foreign entity's financial statements are not used for consolidation purposes and are considered self-contained.

Self-Sustaining Foreign Entity Operates Independent of the Parent Multinational and the Current-Rate